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Friday, February 20, 2015

Sony to spin off video and audio units

Sony chief executive Kazuo Hirai has been struggling to turn around its television and smartphone businesses

Sony has said it will
spin off its video-and-audio business into a separate company as part of
a three-year plan to return to profit.

The loss making Japanese electronics giant firm plans to achieve an operating profit of 500bn yen (£2.17bn) by March 2018.

Sony added it would shrink its head office as part of the restructuring.

The firm has forecast a loss of 170bn yen in the year to March compared with a 40bn yen loss last year.

Last September, Sony issued its sixth profit warning in two
years saying it expected losses of 230bn yen, more than four times its
original forecast of losses of 50bn yen for the year.

It also said it would not pay a year-end dividend for the first time.

On Wednesday, Sony chief executive Kazuo Hirai said the
company must not be afraid to change if it hoped "to grow in a Sony-like
way".

He said the Japanese electronics firm would no longer pursue
sales growth in areas such as smartphones where its has suffered
competition from rivals Apple and Samsung.

Mr Hirai said instead it would focus on profitable businesses
areas, including entertainment operations such as TV programming and
the PlayStation game business.

The video-and-sound unit will be spun off by October, he added.

Sony hack
Other parts of Sony may also be spun off, Mr Hirai said, with
the computer chips and batteries divisions likely candidates, but
details had yet to be decided.

He added he could not "rule out considering an exit
strategy", from Sony's TV and mobile phone units in the company's
clearest statement to date about the possibility of selling or finding
partners for the struggling units.

Sony said it still sees its film division as a growth area
despite the cyber attack it suffered in December, which saw emails from
Sony Pictures executives leaked online.

The cyber attack came as Sony Pictures prepared to release
its film The Interview, which involves a fictional plot to kill the
North Korean leader Kim Jong-un.

Sony has struggled in recent years as it fell behind in
fast-growing areas such as smartphones and flat-screen TVs. Sales of
blu-ray DVDs have also declined with the growth of online movie
streaming services, such as Netflix.

Splitting out divisions would help to make the company more
nimble, making each operation more accountable for results, Mr Hirai
said.

Sony spun off its TV unit last year and exited the personal computer business.